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International oil prices plummeted on monday after the United States and Iran announced an agreement to end their three-month-long conflict. The news eased fears of potential disruptions to global crude oil supplies and triggered an immediate reaction in energy markets.
According to market data, Brent crude futures contracts fell $3.67 per barrel to $82.06, representing a daily drop of 4.28%. This correction is also reflected in the weekly performance of crude oil, which has accumulated a decline of 12.28%.
The main reason behind this drop is the reopening of the Strait of Hormuz, a strategic route through which approximately 20% of the world’s traded oil passes. During the conflict, investors feared restrictions on maritime traffic or supply disruptions, factors that drove prices higher.
However, the announcement of the agreement between Washington and Tehran quickly changed market expectations. With a lower probability of disruptions to crude oil shipments from the Middle East, part of the so-called “geopolitical risk premium” that had driven up oil prices in recent weeks disappeared.
US President Donald Trump confirmed the agreement and announced the lifting of the naval blockade in the region, as well as the toll-free opening of the Strait of Hormuz. The official signing of the agreement is scheduled for June 19 in Switzerland, with Pakistan acting as mediator.
The drop in oil prices was accompanied by gains in major global stock markets, as investors interpreted the agreement as a sign of stability for energy markets and the global economy. Furthermore, lower crude oil prices could help reduce inflationary pressures related to transportation, industry, and power generation.
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